In a recent post, the headline said "My S&P Target Is 2,800." You are probably wondering how I got there.
Well, I didn't quite get to 2,800, but round numbers are nice, and I got close enough that there's a reasonable rationale for expecting the S&P 500 to get there. The actual technical target range was a little lower.
Here's how I got there… and why you should be prepared for the S&P 500 to get to 2,800 and know what to do when it does.
The long-term cycle projection first pointed to a target of 2,600-2,650 in June of this year.
I have updated the long-term cycle projections, and the news is not good for bears.
Cycles beyond four years are trending, with no date projection for a final peak. The long-term trend (cycles longer than eight years) price projection is 2,600-2,650.
Long-term projections now say that the SPX is going higher.
Here's how this works…
These Cycle Charts Show You Exactly How I Got to 2,800
Cycle analysis expert J.M. Hurst proposed that by centering two moving averages back in time, we could project the target of the move. One of the moving averages is set at the full time length of the cycle. So for example, the two-year cycle would use a 104-week moving average, because that's how long the cycle would ideally last. Typical variances wouldn't matter.
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Keep in mind that a moving average is just that, an average. It represents the middle value. For a time series like a stock chart, the latest calculation actually represents not where the average is today, but where it was as of the middle of the period, or back 104 weeks. So Hurst has us drop the moving average back by 52 weeks. That accurately centers it in time. It looks like this:
Here's where the magic starts. With a little math, we can extrapolate that line forward into the future…
That line with its dotted line extension now gives us a picture of what the next bigger cycle is doing. In this case it's the four-year cycle.
Hurst then tells us to overlay a half-span-centered moving average, which would be 52 weeks, dropped back by 26 weeks in this case. Then extend that to its best fit with the current price action. There are little keys to doing that to get the best fit. I have learned what they are through observation and learning what works over the 47 years that I have been doing this. I'll keep those keys to myself, but I'm glad to share the resulting projection with you.
The final result looks like this…
About the Author
Financial Analyst, 50-year charting expert, finance + real estate pro, and market analyst; published and edited the Wall Street Examiner since 2000.